Market View

Satyam: A cleverly crafted scam

Posted by : Udayan Mukherjee

So even if there is any kind of a modest bounce in Satyam from whatever price level because people believe that the 5,000 crore of cash is still there, there is a big line of people and the Fidelity and Aberdeen’s of the world are not going to stand down with Satyam right now because of whatever cash is lying on its books. They want out and they want out like yesterday.

So this stock now has huge amount of overhead supply which just cannot be absorbed because the number of sellers far outnumbers the number of buyers in Satyam Computers at any price point. So this stock could fall to Rs 10 even if there is cash on the balance sheet because there would be a large number of institutional investors who have completely seen this lie and I do not think that they would want to hang on there at Rs 80-70 because of any kind of cash lying on its books.

This stock’s value despite the cash or the business operations right now is probably in single digit rupees. Nobody trust this, you have just broken down the trust completely, how do you believe a management which just cooked up everything from its balance sheet to its earning statement over the last many quarters and serially quarter after quarter went on national TV and reported to the exchanges one magnificent lie after another. It is just completely preposterous.

Who do you believe now?

Satyam is a company which is listed on the New York Stock Exchange (NYSE); this is an index company, quarter after quarter it announces numbers which we take as gospel and we do a lot of analysis, every analyst does on whether margin slipped a bit and wage hikes happened and now you know that none of those numbers existed then who do you believe?. Do you believe auditors, who are supposed to be looking at these companies?

This is a fundamental issue of trust and faith which has been shaken. One can forget about the Satyam stock much that we feel very bad about Satyam shareholders that is one company. Here you stand the risk of actually losing your faith and trust in the system, which is supposed to be policing the numbers which you have faith and trust in. What happens to the auditors? This is a company which is not a fly by night small company, it is listed on a global exchange, global investor – they are supposed to be following US GAAP norms etc and quarter after quarter they keep blinkering all their investors and none of us find out till the promoter one fine day decides to confess.

Could there be more companies doing these kind of thing? What are the auditors doing? How will we ever know? You and I cannot be looking at going into and checking the bank accounts of Satyam and what they earned in a particular quarter or not. At some level there has to be an implicit code of faith that we believe what is posted on the walls of the exchange but today we cannot. So what are these people doing – these auditors and tax consultants and even rating agencies, how have they conducted themselves over the last two-three quarters. It is absolutely appalling.


-Udayan Mukherjee, Managing Editor,CNBC TV18

NIFTY = 4750 & SENSEX = 15000

Posted by : MALAYALI

SATYAM`s Intraday Technical Chart shows, a different story. SATYAM`s Chart, NSE:- Time: 14:14:15 : Trading at 31.00 Per Share & just after 45 Seconds... SATYAM sharp shoots to 43.00 Per Share. What is this means ??? That means... there are still INSTITUTIONAL INVESTORS/TRADERS, ready to invest/trade in SATYAM from the above said levels. And finally, what happened ??? NSE SATYAM closed at 40.25 Per Share after FREEFALLING -77.51%. I`m expecting coming Friday, HUGE... HUGE... HUGE... SHORT COVERING in SATYAM`s FUTURES. MALAYALI : *****09/01/2009 : SATYAM`s Target : 75/85 Per Share*****

NIFTY = 4750 & SENSEX = 15000

Posted by : kadiyali

Dear shubhrasankar,

Congrats. Your first operation in FnO is fruitful. Now keep a watch on Infosys spot price. See how strong it is despite 200 points free fall in nifty! Be prepared to buy Infosys calls now, once this stock too falls in negative zone. Rgrds.

NIFTY = 4750 & SENSEX = 15000

Posted by : raj_tibs

Coolboy,

Instead of averaging at the same strike price, you should consider buying puts at higher stirke price/writing calls..

I bought a 440 PA at 30... Then a 450 PA at 27.. Then i wrote a 470 PA and 470 CA at around 30 each (because of wrong entry by the broker).... Covered the 470 options at about 26 each.. Wrote a 500 CA at 32. Wrote another 500 CA at 48, and bought a 480 PA at 20. Today covered one 500 CA at 12 and sold again at 26.

Net outflow till now --- 32 + 27 + 20 = 79
Net inflow till now --- 2 * (30-26) + 14 + 48 + 32 = 102

Current prices of the 440 PA, 450 PA and 480 PA would give me another 65... So by writing calls, i have been able to ensure i am still net positive.

Also, keep one thing in mind - those who write options are in no hurry to cover them at a loss -- so even when ICICI went to 535, i didn`t cover my 470 call, and the buyer would either be still holding it, or would have have sold it at a low premium... So if an out of money put becomes deeply in the money due to a crash, and you are not able to find any buyer, you need to exercise the option (or write an out of money option)....

To explain, if ICICI goes to 420, I doubt if there would be any buyers for 480 PA at 90... So i will either exercie the option (in which case i make a net profit of (480-420 - 20)), or i may sell 420 PA if i get around 25-30 Rs. for that.

In general, i think it is better to BUY options for low probability movements, and write options for high probablity movements. e.g. if you think the market is likely to fall with a probablity of 70%, better to write a call than buy a put, and hedge it by buying a higher strike call.

I think the best trades for you now will be to not wait till ICICI comes down to 410-420, but rather write out of money calls if ICICI goes up on Friday...

Regards

NIFTY = 4750 & SENSEX = 15000

Posted by : coolboy007

Dear Vam ,

Whatever incident happened , it has bailed out and given fresh blood to bears who were sitting cold for more than a month. Icici fell 10% and am relieved , dont know for how long will this relief last. When came back home , Dad said mkts down 700 and Satyam at 40 , i couldnt believe until switched on tv.
Fidelity and Aberdeen sold at 80 , 40. Aberdeen is one of biggest investors , they said last to last week we have belief in Satyam when stock fell 100 bucks due to maytas issue.
FII will be furious , they are trapped now , were daily pumping in 400 crores in 09 till now.
Regards

WILL NIFTY HIT 4450 IN 2009 ?

Posted by : coolboy007

Ksmuthuswamy ,

Thanks for thinking about me and my stuck puts ;). One more small blow to ICICI will bail me out if it comes. Icici fell 10% so am sure it will go with Nifty atleast. Nifty fell 6%. You had PUTS??? Did u sq them off today?
regards

NIFTY = 4750 & SENSEX = 15000

Posted by : vam_aru

Dear Coolboy,

Yeah, I was surprised at this fall, even though satyam stock Fall like 9 pins, I never expected a market falls by 200 points, I expected a 100 point cut. Now we will be surely drift back as FII sentiment is battered by this episode, Now they will pull out something... just imagine the MF`s , and FII`s holding satyam from 180 and above, how they feel like.

Let`s see how much ICICI can go down..

NIFTY = 4750 & SENSEX = 15000

Posted by : hansal77

TO MALAYALI

Mate, this is NO SHORTS...Dont you see Business news or read on Websites...All major Institutional investors have sold their stakes in Satyam...

Fidelity sold 3.2 Crores shares @Rs 48/ share...YES not 3.2 Crores rupees but 3.2 Crores shares...A couple of more Institutions have sold more than 1.5 Crores of shares...They ARE NOT GOING TO COVER IT BACK...There is no FUTURE left given the Current Mgt at Satyam...Only of someone takes the company, then it has any chance...

It will show Sub 10 atleast once this week...I am going to take a risk of 10K shares when it goes below 10...

WILL NIFTY HIT 4450 IN 2009 ?

Posted by : ksmuthusamy

Hi Coolboy,

when i see icici bank was comfortably going past 525 levels i was remembering you and your puts. you are stuck with that.right? iam happy now you are relieved..( me too had some puts..but in nifty)..

iam not sure about ICICI..if nifty goes down sure you will get the prize.but banks are expected to fall less now ..due to interest rate thing...take care...

NIFTY = 4750 & SENSEX = 15000

Posted by : MALAYALI

SATYAM`s Intraday Technical Chart shows, a different story. SATYAM`s Chart, NSE:- Time: 14:14:15 : Trading at 31.00 Per Share & just after 45 Seconds... SATYAM sharp shoots to 43.00 Per Share. What is this means ??? That means... there are still INSTITUTIONAL INVESTORS/TRADERS, ready to invest/trade in SATYAM from the above said levels. And finally, what happened ??? NSE SATYAM closed at 40.25 Per Share after FREEFALLING -77.51%. I`m expecting coming Friday, HUGE... HUGE... HUGE... SHORT COVERING in SATYAM`s FUTURES. MALAYALI : *****09/01/2009 : SATYAM`s Target : 75/85 Per Share*****

sensex may touch 11000 in jan`2009

Posted by : JONNY-PAPA

sense ----sex will ---willlll crosssss
11580 by mid february-09
belive me or not
its from jonny papa
then u will find te casualities from
whose is who
from the credit card companies
may be the icici bank //// sbi

can be the casualties in india

NIFTY = 4750 & SENSEX = 15000

Posted by : coolboy007

Vam ,

Thanks for telling me. My charts show that a break below 446 for ICICI will take it to 416 levels straightaway. 410 will be very very tough to crack though multiple bottoms have been formed there. Is my chart shwoing right or some error in drawing TL
Regards

NIFTY = 4750 & SENSEX = 15000

Posted by : MALAYALI

100% Sure & Easy Target of SATYAM on 09/01/2009 = 75/85 Per Share. MALAYALI : SATYAM`s... today`s HIGH = 188.70(NSE). Today`s LOW = 30.80(NSE). CLOSED = 40.25(NSE). LOST = -77.51% OR -138.70 Per Share(NSE)

WILL NIFTY HIT 4450 IN 2009 ?

Posted by : coolboy007

Dear Mittal sir ,

I am holding 5 lots ICICIPA400 @ 15-16 CMP 10 and enjoyed todays fall as my loss got halved. I read your fresh analysis today of nifty wherein you gave lower levels for Nifty. Last Month i made losses in my PE and this month want to get profits anyhow. Should i start booking losses slowly or wait till Mid Jan atleast for things to unfold. What are the probanilities of mkts hitting 2600-2700 in Jan so i cn exit my PA with profits, i use your views for my Trading and eagerly await them.

Regards

Satyam disaster: Experts examine the remains

Posted by : MMB Messenger

It has been one of the darkest days in Indian Corporate History. Early this morning Mr. Raju the venerated promoter of Satyam Computers, one of India’s largest IT Companies dropped a bombshell when he sent a five page letter to the Stock Exchanges confessing one of the biggest frauds in Indian Corporate History.